In which situation could an insurance policy's coverage be altered?

The situation in which an insurance policy's coverage could be altered is when the applicant is considered a substandard risk. This classification occurs when an applicant poses a higher risk due to health issues, lifestyle choices, or other factors that could potentially lead to a higher likelihood of claims. In such cases, insurers may adjust the terms of the policy, which can include modifying coverage options, increasing premiums, or imposing exclusions.

When an applicant is evaluated as a substandard risk, it prompts the insurer to reassess the policy’s conditions to align with the higher level of risk that the individual presents. This may involve negotiations for a tailored policy that addresses specific circumstances while protecting the insurer's financial interests.

Conversely, a standard risk represents an individual whose health and lifestyle present typical risk factors, and their policy coverage is unlikely to need significant alterations. An expired policy indicates that the coverage is no longer active, which would not lead to a change in terms, while changes to beneficiaries typically do not affect the coverage level or terms stipulated in the policy itself.